The FSMA clarifies how clients‘ sustainability priorities should be taken into account when trading financial instruments

The FSMA recently published a document providing information on the implementation of the ESMA Guidelines (ESMA35-43-3172) regarding certain aspects of the suitability requirements of the MiFID II Directive.
Under Article 16 of the ESMA Regulation, ESMA can issue guidelines to competent authorities or financial market participants to establish consistent, efficient, and effective supervisory practices within the European financial surveillance system. The competent authorities and market participants are expected to make every effort to comply with these guidelines, and within two months of their issuance, each competent authority must indicate whether it intends to comply or not, providing reasons if it chooses not to.
In this context, ESMA issued the aforementiond „Guidelines on certain aspects of the suitability requirements of the MiFID II Directive“ on 3 April 2023. These guidelines are based on the MiFID II Directive and the Delegated Regulation (EU) 2017/565, which complements the directive concerning organizational requirements and conditions for investment firms. The ESMA guidelines apply to all regulated entities and will be effective six months after 3 April 2023, starting from 3 October 2023. At this date, the previous ESMA guidelines issued on 28 May 2018 (ESMA35-43-1163_E) and the FSMA document FSMA_2018_15 dated 17 December 2018 will no longer apply.
The objectives of these guidelines are to clarify the application of certain aspects related to the suitability requirements, ensuring common, uniform, and consistent implementation of Article 27ter, §2 of the Law of 2 August 2002 on financial sector supervision and financial services, as well as Articles 54 and 55 of the MiFID II Delegated Regulation. They also apply in relation to organizational requirements specified in various laws and regulations.
The guidelines cover several themes, including providing information to clients about the purpose and scope of the suitability assessment, the obligation to know the client and the product, and ensuring product suitability for clients. Other related provisions address the qualification of personnel and the recording and archiving of information.
These guidelines aim to enhance investor protection, promote greater convergence in the interpretation and supervision of the MiFID II suitability requirements, and address key issues. The FSMA believes that these guidelines will provide useful clarifications for the application of the aforementioned articles and will incorporate them into its control framework and supervisory practice.